Case study | Skanska Commercial Development
Skanska & JCommerce Partnership
The rapid growth of the economies of Central and Eastern Europe is largely based on modern technologies and advanced business services. As a byproduct of this success, these industries generate great demand for office space. In Poland, the company not only constructs office facilities, but also roads, bridges, residential developments, conference venues, and cultural and sports facilities, and employs 8000 people. Skanska has long been aware of the investment potential of this market. Poland, Hungary, the Czech Republic and Romania are responsible for over 50% of the entire Skanska group’s global revenue from the sale of office space. In 2014, Skanska commenced cooperation with JCommerce in the framework of solutions which support the building of office space and monitoring the profitability of investing in this region of Europe.
By shifting forecasting into a dedicated application, the company was able to save time without compromising on quality. Skanska not only deals with vast areas in terms of square meters, but also with hundreds of assumptions behind every project, meaning that high quality timeliness forecasts are essential. It has been estimated that such an organization should look a minimum of 5 years ahead in every forecasting period for each project.
Skanska in 2015:
- 530,000 m2 of completed office space,
- 170,000 m2 under construction and 320,000 m2 planned,
- a total of over one million square meters of existing and planned offices,
- offices spread over several cities in Central and Eastern Europe.
ERP System Modernization
The cooperation between Skanska and JCommerce commenced with a project to optimize the ERP Microsoft Dynamics AX system in the Polish branch of the company, Skanska Property Poland. The system which was previously in use within the company no longer fulfilled expectations, and so, in 2012, JCommerce specialists became involved in the development of the system and its adaptation to the needs of the company. After this initial modernization of the system, JCommerce also proposed the creation of a Web application using .Net technology, which enabled users to enter and view data without licensing restrictions to access. This solution was highly popular, and gave rise to new ideas for additional modules, such as:
- Rent Roll, a list of lease agreements,
- Gain on Sales Calculation, which is a tool for recording the profits associated with these projects.
The system implemented at the Polish division of Skanska by JCommerce was presented in such form during the CEE Commercial Property Development meeting, and received wide acclaim. The decision was therefore taken to extend its operation to other markets in the region and integrate it with the existing internal Korab II system. JCommerce specialists have also assumed responsibility for those stages of the project.
Korab II is a dedicated ERP system, which Skanska uses in Central and Eastern Europe. Its integration with the solution created by JCommerce enables the flow of data between systems, both in terms of vocabulary data, such as country names or service codes, and financial data. Changes made in one system will be automatically updated in the other.
Before the implementation of the system Skanska had a number of issues with the consistency of the data:
- the lack of a unified data structure,
- different units, different currencies and different formulas for calculating the same parameters, depending on the methodology in use in that country,
- legal, tax and economic differences,
- problems with standardizing indicators that are vital for development project management, such as the market value of the project, the value of land, costs, inflation, or lease profitability,
- data was entered into a number of different systems simultaneously, and was therefore often different, leading to errors,
- no singular database for analytical processes,
- the highly onerous process of preparation of reports.
Currently the system records all leases, rents, discounts, and annual profits, using the data warehouse. With a significantly improved speed of data entry, users do not have to enter data in different databases and gain direct access to current information and transparent reports. With the web application data being available in all locations at the same time, information is consistent and orderly, without errors resulting from incorrect data entry. Scalability is a considerable advantage, as is the ease of adaptation to the increased needs of the company, thanks to the technologies used as well as licensing models.
The reporting consolidation process in all the countries covered by the system is reduced by a period of one day. The higher quality of the data can be seen in the lower number of questions which need to be asked and the lower number of revisions which any of the countries need to submit. Moreover, further new modules are planned which will be designed to connect the application directly with HFM, the consolidation tool used by Skanska worldwide – this should result in additional time savings and improved quality in the reporting consolidation process.
The future of the system
At this point, more data grids are added to be processed and analyzed, and further extensions of the functionality of the system are planned, such as:
- a new Land Valuation tool which analyzes changes in the reported book value of land compared to market value,
- the integration of a new CRM system,
- the addition of certain external market data.
The system has been presented in all of Skanska’s business regions, meaning Scandinavia, the UK, and the United States, and there is a desire to roll out the system in all locations. This is obviously another big challenge that requires the adaptation of the system to local conditions, such as different accounting systems, or changing the metric system to the imperial system in the United Kingdom and the United States.
About the client
Skanska Commercial Development Europe offers commercial development services in Poland, Hungary, and the Czech Republic. The company is based in Solna, Sweden.